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How big is your neighbourhood? Spatial implications of market participation among Filipino smallholders

Holloway, G. and Lapar, M. L. A. (2007) How big is your neighbourhood? Spatial implications of market participation among Filipino smallholders. Journal of Agricultural Economics, 58 (1). pp. 37-60. ISSN 0021-857X

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To link to this item DOI: 10.1111/j.1477-9552.2007.00077.x

Abstract/Summary

We present a procedure for estimating two quantities defining the spatial externality in discrete-choice commonly referred to as 'the neighbourhood effect'. One quantity, the propensity for neighbours to make the same decision, reflects traditional preoccupations; the other quantity, the magnitude of the neighbourhood itself, is novel. Because both quantities have fundamental bearing on the magnitude of the spatial externality, it is desirable to have a robust algorithm for their estimation. Using recent advances in Bayesian estimation and model comparison, we devise such an algorithm and illustrate its application to a sample of northern-Filipino smallholders. We determine that a significant, positive, neighbourhood effect exists; that, among the 12 geographical units comprising the sample, the neighbourhood spans a three-unit radius; and that policy prescriptions are significantly altered when calculations account for the spatial externality.

Item Type:Article
Refereed:Yes
Divisions:Faculty of Life Sciences > School of Agriculture, Policy and Development
ID Code:8676
Uncontrolled Keywords:Bayesian estimation and model comparison, neighbourhood effects, smallholder market access, spatial probit model, AUTOREGRESSIVE MODELS, MARGINAL LIKELIHOOD, BAYESIAN-ESTIMATION, TRANSACTIONS COSTS, DISTRIBUTIONS, CONVERGENCE, INFERENCE, BEHAVIOR, AFRICA, OUTPUT

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